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Forex, fx or foreign exchange are referring to the act of exchanging one country's currency by another country's currency. Exchanging currencies is one of the oldest sectors of trade. While in the past most forex trades were made because the purchaser wanted to buy something in a foreign country (souvenirs, imported commodities and etc'), today, most people trade forex in order to make money from the volatility of the market. To the traditional exchange booth and banks joined the forex brokers, that provide an easy to use trading platform which any individual can master.

Who trade forex?

Forex is the biggest and the highest liquidity market there is with an average daily turnover of 4 TRILLION USD. So the short answer to the question above is: everyone. What use to be the exclusive privilege of banks and huge financial corporation's is now available to all sorts of traders, big and small. Export/Import business, small financial companies, currencies speculators and individual traders who just want to feel the thrill of the market. The possibility to get started with a tiny amount of just 100$ burst the boundaries for all.

Most traded currencies

Although most forex brokers will let you trade forex, securities and commodities in the same trading platform some of the choices are more popular than others. Those choices go by the name Major. Here are the Majors and their distribution in the forex market:*

United States dollar (USD) 84%

Euro (EUR) 39%

Japanese yen (JPY) 19%

Pound sterling (GBP) 12%

And their pairs:

EURUSD 28%

USDJPY 14%

GBPUSD 9%

As you can see, most of the daily trade is concentrated in just a few currencies pairs. Those pairs enjoy the highest liquidity in the market.

* estimated

Trading hours

Forex is a 24/5 market, opens at 20:15 GMT on Sunday and closes at 22:00 GMT Friday. For you as a trader it is essential to know the main trading hours of your preferred currencies pair. At those hours you will find the highest liquidity and the smallest spread.

Here are some of the most common pairs trading hours: (GMT)

EURUSD 13:00 - 16:00

GBPUSD 13:00 - 16:00

AUDJPY 24:00 - 06:00

Why forex is a bit different

Forex trading is like trading any other security or commodity except you can use a designated trading platform and get trading terms that does not exist in any other sector. The forex trading platforms are usually easy to use and packed with lots of tools (graphs, indicators and etc') that helps the trader in applying his strategy. Another "tool" that you will get from a forex broker, and maybe the one that is most identified with forex trading, is leverage. Using leverage in forex trading is common thing and it can be profitable and deadly to your capital at the same time.

To conclude, in forex trading, like in any other sector of trading, there are no miracles. In order to succeed you will learn a lot, practice, do mistakes and learn from it until you'll do it right. Use the advantages in forex trading for your benefits.

Good Luck!

Jack Seur
Compare BeForex - Track down your most wanted broker
http://www.compare-beforex.com/
[email protected]

By Jack Seur